Skilled Migration Abroad or Human Capital Flight?

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Skilled Migration Abroad or Human Capital Flight?

June 1, 2003

Feature

By B. Lindsay Lowell

Does the international flow of highly skilled migrants connect and spark the circuits of an interconnected global economy, or does the flow transfer scarce human capital from the poor world to the rich? Not since the 1970s has concern about "brain drain" been as prominent, doubtless due to the increasing numbers of highly skilled migrants now on the move. The "New Economy" of the 1990s brought the issue to the fore as the developed world competed for workers in information technology and communications from the developing world.

Two conditions are necessary for the term "brain drain" to apply to a given country. First, there must be a significant loss of the highly educated population. Second, adverse economic consequences must follow. A detailed examination of these conditions reveals that while the direct impact of significant outflows of human capital will likely have a negative effect on economic growth, feedback effects may actually stimulate economic growth.

Skilled Migration in the Western Hemisphere

There are few current estimates of how many of the world's international migrants are highly educated. We do know that in the Western Hemisphere, most highly skilled migrants go to the United States, the world's single largest magnet for skilled migrants. We also know that there are relatively few highly educated people in developing countries, and that the highly educated are very likely to migrate.

Figure 1

Data are presented here for Latin America, Central America, and the Caribbean (Lowell and Suro 2002). Only about one-fifth of Latin Americans have completed high school or some college. But looking at those who have migrated we find that, on average, a little over half of Latino immigrants in the United States have a secondary education or better. This is true for 85 percent of South Americans, two-thirds of Caribbean immigrants, one-third of Central Americans, and just over one-quarter of Mexicans. Well-educated Latin Americans are at least two and a half times more likely to be in the United States than the home-country population.

What are the demographic impacts, however, on the sending countries? While it is true that large numbers of less-educated Latino immigrants are in the United States, they are a small fraction of those in the sending countries who could potentially migrate. At the low end of the educational spectrum, less than six percent of Latin Americans with a primary education or less live in the United States. At the upper ends of the spectrum the loss of Latin Americans can be rather large. As indicated in Figure 1, a large number of immigrants in the U.S. completed their education in their home country. While the sending country has financed their education, it ultimately forgoes its investments and other returns on migrant talents.

The Caribbean has the greatest share of its well-educated population living in the United States. Roughly one-third of the Caribbean's secondary, as well as its college-educated population, live abroad. Countries with the largest impact in the hemisphere are Jamaica and Haiti, which have two-thirds of just their college-educated population living in the United States. In contrast, South Americans in the United States represent less than three percent of the southern continent's highly educated population. There are relatively few South Americans in the United States, so they do not make up a significant share of the sending population. The losses of well-educated Mexicans and Central Americans fall in between. For unknown reasons, particularly large shares of Central Americans with a secondary education are found in the United States—about two-fifths of Salvadorans and a little over a third of Nicaraguans.

While the more dramatic of these figures do not establish clearly that a brain drain exists from developing countries in the Western Hemisphere to the United States, they should give pause. The first necessary condition for a brain drain, after all, is a significant loss of the highly educated population.

Types of Brain Mobility

Economic Research on Development

The second necessary condition for "brain drain" is that adverse economic consequences follow. A useful way to think about the research is to consider direct impacts and indirect impacts (feedback effects).

The direct economic impacts are likely adverse. Neo-classical economists concluded in the 1970s that a loss of skilled workers would retard national growth. Recent research drawing on "new or endogenous growth" theory adds the common sense observation that human capital, an educated workforce, is one of a country's most valuable assets. One study found that a one-year increase in the average education of a nation's workforce increases the output per worker by between five and 15 percent (see Barro and Sala-I-Martin 1995). Low levels of education slow economic growth, the studies argue, damage the earnings of low-skilled workers, and increase poverty.

There are also, however, positive indirect impacts (Lowell and Findlay 2002). "Optimal brain drain" theory finds some support for the notion that the possibility of emigration for higher wages induces more students in the sending country to pursue higher education. Many end up staying and improving the country's educational profile. Feedback from expatriates includes today's more than $32 billion in remittances sent to Latin America (Agencia EFE 2003), a figure often larger than U.S. aid or foreign direct investment. In a shrinking global village, expatriates also keep their social and professional networks, stimulating a reverse flow of innovations and technological capacity. And many expatriates do return home with valuable experience and networks. Indeed, return migration may provide optimal returns to both sending and receiving countries.

It is impossible to summarize the available research and reach a single conclusion. The best we can say is that the direct impact of an outflow of human capital, just like monetary capital flight, will likely adversely affect economic growth. However, the strength of feedback effects must be evaluated, as they can generate positive economic growth. In fact, the accompanying typology (see text box) of skilled emigration illustrates the range of possible effects that complicates further the simple classifications of direct and indirect impacts.

Concluding Observations

While definite conclusions are still waiting on more solid data, concerned observers will not shrug off the renewed discussion of brain drain.

Although the Western Hemisphere may have some of the world's greatest brain drain, there are large outflows from Africa and elsewhere, too (Lowell and Findlay 2002). The magnitude of the educational losses, coupled with the realistic theoretic and empirical evaluation of economic impacts, make adverse brain drain all too likely a reality for some developing nations. Arguably, from a sociological perspective, one would also want to factor in adverse social and political consequences of losing a scarce and potentially influential pool of talent. The ramifications may extend beyond the economic realm.

It is also quite possible for a nation to benefit economically from its skilled emigrants in general, but to experience significant losses in other fields, e.g., its artistic endeavors or scientific advances. Compared to the rich countries, the developing world has little in the way of investment in science, and its density of science workers is 10 to 30 times smaller—what United Nations Secretary General Kofi Annan calls the "two worlds of science." The challenge is convincing policymakers to take the issue seriously and to implement immigration policies and multilateral agreements that optimize the flow of skilled migrants. Research must be ongoing, but it must also entertain a variety of outcomes and be willing to delve into sub-sectors of the political economy.